With the festive season fast approaching, traders' minds are likely elsewhere; whether it be the thought of attending end-of-year parties, buying presents for loved ones or daydreaming about their impending holidays. Well, this is all normal. It's been a long year, why not kick back, have some eggnog, and open up those presents?
Well, you might do that, but then you might be one of those traders that simply can't get enough of trading the markets and are try to squeeze some last-minute pips out leading into Christmas. For those trading, the most important thing to keep in mind when you trade during the festive season is volatility.
How to Deal with Pre-Christmas Volatility
The activity in the sessions before Christmas may be lighter than usual. However, lighter trading can actually be a good thing for traders, as price fluctuations could be much calmer and, therefore, more technically accurate. Volatility doesn't have a bias. It can increase or decrease during both uptrends and downtrends in a currency pair, interchangeably. Volatility tendencies and shifts in volatility give us different cues about how we should be trading.
For that reason, we should be able to choose between low and high volatility strategies that are suitable for pre-festive season trading.
Both November and December can be great months for trading, for the following reasons:
- Profit taking
- Inter-market correlation
Strong profit taking usually brings us higher volatility. And it is created by big players (smart money). Due to that simple fact, jumping on a trade that has been created by smart money could be very profitable. Breakouts of daily/weekly/monthly levels could be exploited to your advantage, if we are on the right side of the market.
For day-trading, trends usually shape up during the first three hours of each major session – London, New York and Tokyo. If you are at the right spot at the right time, you can make your day with only a single trade. Coupled with possible profit-taking, a trend that is shaped during November and December can make your Christmas happier than ever. That's why you could try to day-trade, attempting to exploiting all possible setups.
Intermarket correlation is very strong between the Yen crosses and equities such as Nikkei, DAX and SP500. The JPY is connected to risk-on and risk-off sentiments in risky asset classes, like equities and, to a certain degree, commodities. As a result, JPY carries a fair degree of volatility, which makes it good to trade. Often traders will perform the Yen carry trade, due to its low interest rates in Japan, also adding to the volatility of this pair.
Christmas Comes Early with Admiral Markets!
Amazing news! Between 21 November and 22 December, 2017 – Admiral Markets is offering a spread rebate on 15 of our most traded instruments! All you need to do to get involved is go to the campaign web page and:
- Choose up to three instruments and apply;
- Wait for us to contact you with confirmation of your participation and then start trading;
- If you meet all the conditions, you'll receive your spread refund!
To see full participation directions, T&Cs and everything else you need to know, check out our the campaign web page.